In a bid to fortify the security of its network, Stride, a multichain liquid staking protocol, has proposed a significant initiative to the dYdX community. The proposal advocates for the staking of 20 million DYDX tokens, valued at $67 million, from the community pool using Stride 2. This strategic move is geared towards augmenting the economic security of dYdX community members by redistributing stake weight and chains among appropriate validators.

The proposal emphasizes the recent acquisition of 115 million DYDX tokens by the dYdX chain, with an approximate value of $388 million. Moreover, the liquid supply tokens are estimated to surpass 320 million DYDX, amounting to a value of $1.08 billion. Presently, the total value locked (TVL) or deposits on the dYdX chain stands at $140 million, with the market value of 114 million DYDX tokens reaching $486 million.

This initiative offers tangible benefits, including empowering the dYdX community to safeguard users' interests and bolster their economic stability by supporting the expansion of dYdX. Furthermore, it provides the community with the flexibility to address high-stakes issues related to weight allocation among senior validators. Active validators are enabled to proactively validate with reduced voting power, thus diversifying the holdings of the dYdX community treasury into USDC.

The predominant denomination of transaction and trading fees in USDC suggests that participation in the dYdX chain can concurrently amplify yields for holders. stDYDX serves various DeFi use cases within Cosmos and furnishes a stable source of collateral assets with a non-inflationary yield. Despite the stability of DYDX token stakes and the surge in main chain deposits, concerns have been raised regarding the potential rise in malicious activities alongside the expansion of the community treasury.

Staking rewards for dYdX entail earning through user fees on the trading protocol, accumulating as USDC stablecoins. An auto-compounding rewards mechanism implemented in staked DYDX anticipates gradual accumulation within the community treasury over time. In view of liquid token staking incentives, Stride's protocol fees have escalated to 10%, with a reduction to 7.5% based on stake positions. Stake payouts result in USDC inflows channeled into the community treasury, with 90% of incentives auto-compounded in DYDX and 2.5% in USDC.

Operating as a proof-of-stake protocol, the dYdX chain employs CometBFT for consensus and maintains an active set of sixty validators. The L1 token of this blockchain, dYdX, serves the dual purpose of staking, enhancing network security, and governing the dYdX chain.